Government consults on ministerial power to set NICE cost thresholds

The government has launched a consultation on changes that would give ministers formal power to direct the National Institute for Health and Care Excellence (NICE) on the cost-effectiveness thresholds used to assess medicines.

The consultation, which closes on 13 January 2026, proposes amending NICE regulations to allow the health secretary to set the 'standard cost-effectiveness threshold' used in the development of guidance, including technology appraisals and highly specialised technology evaluations.

The proposed change would also mean NICE would not have to consult publicly before implementing ministerial directions on the threshold.

The Department of Health and Social Care (DHSC) observed that the threshold reflects a public policy judgement on 'the amount of the healthcare budget that should be apportioned to innovative new treatments' and that ministers, rather than NICE, should hold responsibility for setting it.

The current regulations mean the threshold can only be changed by a decision of the NICE board, with the Government having no legal power to direct NICE to amend this. Proposed changes would mean that NICE would no longer have to consult on changes that are directed by ministers.

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The government's impact assessment accompanying the consultation acknowledges there is a risk the changes 'could be perceived to undermine NICE's independence', although it states the direction-giving power would be 'very tightly defined' and ministers would remain unable to direct NICE on the substance of individual guidance decisions.

The assessment also warns the move could 'create business uncertainty', noting the threshold has been stable for more than 20 years and 'provides a stable environment for company decision-making'.

It adds there is a risk the power 'may be perceived by businesses as enabling the threshold to be changed with more frequency making the UK a more unpredictable access market', although it anticipates changes will be 'very infrequent'.

The consultation was launched after the government announced the NICE cost-effectiveness threshold would increase as part of a UK-US trade deal.

In early December, DHSC confirmed NICE will apply new thresholds of £25,000-£35,000 per quality-adjusted life year (QALY), representing a 25% increase from the current range of £20,000-£30,000 that has been in place since 1999. NICE confirmed the move, but in a Q&A on its website, when asked if it will have to consult to change the manual, NICE said 'the details of how this change will be made will be confirmed in due course'.

The threshold increase was presented as part of a wider economic agreement with the US that includes 0% tariffs on UK pharmaceutical exports worth at least £5bn a year for three years.

The aim of the deal is to expand NHS access to vital drugs, safeguard medicine supply chains and drive investment, the government said.

The threshold increase followed reports in October that the government was considering raising the threshold range to £25,000-£35,000 after a months-long dispute with the pharmaceutical industry over NHS drug pricing.

National reports said ministers were at loggerheads over where to find the billions needed to pay more for medicines, with neither NHS chiefs nor the Treasury wanting to foot the bill.

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The Association of the British Pharmaceutical Industry (ABPI) argued that the threshold was too low and called for a baseline of £40,000-£50,000 per QALY.

It pointed out that if the upper threshold had risen with inflation since 1999, it would now be around £56,794, or £59,150 if increased in proportion with NHS budget growth since 2014.

However, the Nuffield Trust argued that the current £30,000 threshold had already been 'set too high' because it exceeded the average cost to the NHS of producing one QALY through existing services such as GP care or surgical procedures.

Senior policy analyst Sally Gainsbury warned that 'giving in to demands from pharmaceutical companies to spend more on drugs would mean less money available for other services and treatments’.

Following the US deal, ABPI chief executive Richard Torbett described the threshold increase as an 'important step' towards ensuring NHS access to innovative medicines, although he observed that many details remained unclear and further technical improvements were needed.

Patient groups including Asthma + Lung UK, Brain Tumour Research and Myeloma UK also welcomed the threshold increase, saying it should improve access to innovative treatments for people with serious conditions.

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However, pharmacy organisations have warned that higher branded medicine costs must not be offset by cutting generic medicine reimbursement.

In a joint letter to the House of Lords Public Services Committee, the Company Chemists' Association, Community Pharmacy England, the Healthcare Distribution Association and Medicines UK said generic medicines prices have 'hit rock bottom', with more than 850 million packs reimbursed at 99p or less for up to a month's supply.

The organisations jointly proposed the three actions of: funding models that incentivise participation in both branded and generic markets; a procurement model allowing sustainable operation across the supply chain; and a review of drug tariff pricing to reduce medicines supplied at a loss.